As water scarcity emerges as one of the defining challenges of the 21st century, companies and investors are realizing that there are many ways a company’s water use can pose significant risk to its bottom line. Dwindling or variable water supplies can bring manufacturing to a halt. Deteriorating water quality can lead to higher capital and operating treatment costs. Changes in regulation can expose polluting industries to fines and sanctions. Additionally, a company’s reputation can be damaged by unsustainable water use, leading to a decline in sales and revenues. Further complicating the issue, exposure to water risk in all of its forms varies significantly from region to region and across sectors.
Despite the complexity and urgency of water risk, companies and investors are still struggling to understand and disclose this risk. Current disclosure, where provided, is limited to reports of companies’ direct water use without the sector- and region-specific context needed to ascertain the underlying financial risk.
The Water Risk Atlas: Providing Context
The Water Risk Atlas is a tool that provides geographical and sector-specific water risk context for companies and their investors. The risk maps generated by the Atlas will help companies understand the intricacies of water risk, and in turn manage their exposure to such risk. When completed, the Atlas will include a global map for current and future water scarcity and water quality as well as detailed, multi-variable risk maps for the most water-stressed, economically significant river basins around the world.
The Water Risk Atlas’ maps are developed by aggregating and weighing various indicators that drive water risk. These indicators go beyond physical data (such as water supply) to capture local regulatory structures, and even potential reputational impacts. To learn more about the data sources used, and how they are organized, visit the How it Works tab.
Flexible and Transparent
Since different companies in different sectors are exposed to different types of risk, the Water Risk Atlas was built to be as flexible and transparent as possible. Users can create risk profiles, adjusting the weight and priority given to risk categories, drivers, or even individual indicators, to reflect their unique circumstances. WRI is convening water experts from a wide range of companies and organizations to construct standardized risk profiles that capture the water issues most pertinent to specific sectors.